Q1 diluted EPS of $0.73 was flat to the prior year; Adjusted EPS(1)
increased to $0.84 from $0.73 the prior year

PITTSBURGH & CHICAGO--(BUSINESS WIRE)--
The Kraft Heinz Company (NASDAQ: KHC) ("Kraft Heinz" or the "Company")
today reported first quarter 2017 financial results that primarily
reflected lower consumption versus the prior-year period in North
America, offset by significant gains from cost savings initiatives and
benefits from the redemption of preferred stock in the prior year.

"Although our top line results in the first quarter reflect a slow start
to the year, we remain on track with our key initiatives," said Kraft
Heinz CEO Bernardo Hees. "We are delivering product innovations,
renovations and geographic expansion that positions Kraft Heinz to drive
organic sales growth for the balance of 2017 and beyond. We also have
good visibility on costs, savings and what we must do to deliver another
year of profitable growth for The Kraft Heinz Company."

Q1 2017 Financial Summary

For the Three Months Ended

Year-over-year Change

Impact of

April 1, 2017

April 3, 2016

Actual

Currency

Organic

(in millions, except per

share data)

Net sales

$

6,364

$

6,570

(3.1

)%

(0.4

) pp

(2.7

)%

Operating income

1,551

1,513

2.5

%

Net income/(loss) attributable to common shareholders

893

896

(0.3

)%

Diluted EPS

$

0.73

$

0.73

—

%

Adjusted EBITDA(1)

1,885

1,951

(3.4

)%

(1.0

) pp

Adjusted EPS(1)

$

0.84

$

0.73

15.1

%

Net sales were $6.4 billion, down 3.1 percent versus net sales for the
year-ago period, including an unfavorable 0.4 percentage point impact
from currency. Organic Net Sales decreased 2.7 percent versus the
year-ago period. Pricing increased 1.0 percentage points as price
increases in Rest of World markets, primarily Latin America, as well as
the United States more than offset an unfavorable impact from
promotional timing versus the prior-year period, particularly in Canada
and Europe. Volume/mix decreased 3.7 percentage points as declines in
North America more than offset growth in Rest of World markets and
Europe.

Net income attributable to common shareholders decreased to $893 million
and diluted EPS of $0.73 was flat to the prior-year period. Adjusted
EBITDA decreased 3.4 percent versus the year-ago period to $1.9 billion,
including an unfavorable 1.0 percentage point impact from currency.
Excluding the impact of currency, Adjusted EBITDA declined primarily
reflecting incremental gains from cost savings initiatives(2)
that were more than offset by net sales declines in the United States
and Canada versus the prior-year period and business investments in Rest
of World markets. Adjusted EPS increased 15.1 percent versus the
year-ago period to $0.84, primarily due to benefits from the refinancing
of Series A Preferred Stock.

Q1 2017 Business Segment Highlights

United States

For the Three Months Ended

Year-over-year Change

Impact of

April 1, 2017

April 3, 2016

Actual

Currency

Organic

(in millions)

Net sales

$

4,552

$

4,715

(3.5

)%

0.0 pp

(3.5

)%

Segment Adjusted EBITDA

1,472

1,493

(1.4

)%

0.0 pp

United States net sales were $4.6 billion, down 3.5 percent versus the
year-ago period. Pricing increased 0.7 percentage points primarily due
to price increases in cheese. Volume/mix decreased 4.2 percentage points
from a combination of consumption weakness across categories, primarily
driven by calendar shifts, as well as select distribution losses in the
club channel. The categories most affected by these factors were
foodservice, cheese, meats and nuts. These declines were partially
offset by continued growth from Lunchables, and innovation-led
growth in frozen meals and macaroni and cheese.

United States Segment Adjusted EBITDA decreased 1.4 percent versus the
year-ago period to $1.5 billion, primarily reflecting gains from cost
savings initiatives and pricing that were more than offset by the
decline in volume/mix as well as unfavorable key commodity(3)
costs, particularly coffee and meats.

Canada

For the Three Months Ended

Year-over-year Change

Impact of

April 1, 2017

April 3, 2016

Actual

Currency

Organic

(in millions)

Net sales

$

443

$

504

(12.2

)%

2.7 pp

(14.9

)%

Segment Adjusted EBITDA

126

151

(16.6

)%

2.2 pp

Canada net sales were $443 million, down 12.2 percent versus the
year-ago period, despite a favorable 2.7 percentage point impact from
currency. Organic Net Sales decreased 14.9 percent versus the year-ago
period primarily reflecting later implementation of go-to-market
agreements with key retailers. Pricing was down 1.0 percentage points
due to changes in promotional spending levels versus the prior year.
Volume/mix decreased 13.9 percentage points driven by a combination of
reduced in-store activity and discontinuation of certain products at
retail. The categories most affected by these factors were cheese and
coffee.

Canada Segment Adjusted EBITDA decreased 16.6 percent versus the
year-ago period to $126 million, including a favorable 2.2 percentage
point impact from currency, as incremental cost savings were more than
offset by the impact of net sales declines versus the prior year.

Europe

For the Three Months Ended

Year-over-year Change

Impact of

April 1, 2017

April 3, 2016

Actual

Currency

Organic

(in millions)

Net sales(4)

$

543

$

583

(6.8

)%

(6.6

) pp

(0.2

)%

Segment Adjusted EBITDA(4)(5)

170

180

(5.6

)%

(10.2

) pp

Europe net sales were $543 million, down 6.8 percent versus the year-ago
period, including a negative 6.6 percentage point impact from currency.
Organic Net Sales were 0.2 percent lower than the year-ago period.
Pricing decreased 0.6 percentage points, primarily reflecting
promotional timing in the UK and Italy. Volume/mix increased 0.4
percentage points as growth of condiments and sauces in the UK was
partially offset by ongoing consumption weakness in Italy and the
Netherlands.

Europe Segment Adjusted EBITDA decreased 5.6 percent versus the year-ago
period to $170 million, including an unfavorable 10.2 percentage point
impact from currency. Excluding the impact of currency, Segment Adjusted
EBITDA increased 4.6 percent versus the year-ago period as manufacturing
savings were partially offset by higher input costs in local currency.

Rest of World Segment Adjusted EBITDA decreased 11.8 percent versus the
year-ago period to $146 million, including an unfavorable 2.7 percentage
point impact from currency. Excluding currency impacts, Segment Adjusted
EBITDA declined as Organic Net Sales growth was more than offset by
business investments to support growth and higher input costs in local
currency.

End Notes

(1) Organic Net Sales, Adjusted EBITDA and Adjusted EPS are non-GAAP
financial measures. Please see discussion of non-GAAP financial measures
and the reconciliations at the end of this press release for more
information.

(3) The Company's key commodities in the United States and Canada are
dairy, meat, coffee and nuts.

(4) In the fourth quarter of 2016, the Company moved the Russia business
from the Rest of World segment (as defined below) to the Europe segment.
This change resulted in reclassification of net sales from the Rest of
World segment to the Europe segment of $30 million and Segment Adjusted
EBITDA of $1 million for the first quarter ended April 3, 2016.

(5) In the fourth quarter of 2016, management of our Global Procurement
Office ("GPO") moved from one of our European subsidiaries to our global
headquarters. This change resulted in the reclassification of Segment
Adjusted EBITDA from the Europe segment to general corporate expenses of
$2 million for the first quarter ended April 3, 2016.

(6) Rest of World is comprised of two operating segments: Latin America;
and Asia Pacific, Middle East and Africa ("AMEA").

Webcast and Conference Call Information

A webcast of The Kraft Heinz Company's first quarter 2017 earnings
conference call will be available at ir.kraftheinzcompany.com.
The call begins today at 5:00 p.m. Eastern Time.

ABOUT THE KRAFT HEINZ COMPANY

The Kraft Heinz Company (NASDAQ: KHC) is the fifth-largest food and
beverage company in the world. A globally trusted producer of delicious
foods, The Kraft Heinz Company provides high quality, great taste and
nutrition for all eating occasions whether at home, in restaurants or on
the go. The Company's iconic brands include Kraft, Heinz, ABC,
Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell
House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero,
Weight WatchersSmart Ones and Velveeta. The Kraft
Heinz Company is dedicated to the sustainable health of our people, our
planet and our Company. For more information, visit www.kraftheinzcompany.com.

Forward-Looking Statements

This press release contains a number of forward-looking statements.
Words such as "expect," "remain," "visibility," "execute," "expand,"
"drive," "deliver," "believe," "will," "focus," and variations of such
words and similar expressions are intended to identify forward-looking
statements. Examples of forward-looking statements include, but are not
limited to, statements regarding the Company's plans, objectives,
pipeline, visibility, initiatives, opportunities, capabilities,
investments, execution and growth. These forward-looking statements are
not guarantees of future performance and are subject to a number of
risks and uncertainties, many of which are difficult to predict and
beyond the Company's control.

Important factors that may affect the Company's business and operations
and that may cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, increased
competition; the Company's ability to maintain, extend and expand its
reputation and brand image; the Company's ability to differentiate its
products from other brands; the consolidation of retail customers; the
Company's ability to predict, identify and interpret changes in consumer
preferences and demand; the Company's ability to drive revenue growth in
its key product categories, increase its market share or add products;
an impairment of the carrying value of goodwill or other
indefinite-lived intangible assets; volatility in commodity, energy and
other input costs; changes in the Company's management team or other key
personnel; the Company's inability to realize the anticipated benefits
from the Company's cost savings initiatives; changes in relationships
with significant customers and suppliers; execution of the Company's
international expansion strategy; changes in laws and regulations; legal
claims or other regulatory enforcement actions; product recalls or
product liability claims; unanticipated business disruptions; failure to
successfully integrate the business and operations of the Company in the
expected time frame; the Company's ability to complete or realize the
benefits from potential and completed acquisitions, alliances,
divestitures or joint ventures; economic and political conditions in the
nations in which the Company operates; the volatility of capital
markets; increased pension, labor and people-related expenses;
volatility in the market value of all or a portion of the derivatives
that the Company uses; exchange rate fluctuations; disruptions in
information technology networks and systems; the Company's inability to
protect intellectual property rights; impacts of natural events in the
locations in which the Company or its customers, suppliers or regulators
operate; the Company's indebtedness and ability to pay such
indebtedness; tax law changes or interpretations; and other factors. For
additional information on these and other factors that could affect the
Company's forward-looking statements, see the Company's risk factors, as
they may be amended from time to time, set forth in its filings with the
Securities and Exchange Commission (the "SEC"). The Company disclaims
and does not undertake any obligation to update or revise any
forward-looking statement in this press release, except as required by
applicable law or regulation.

Non-GAAP Financial Measures

To supplement the financial information, the Company has presented
Organic Net Sales, Adjusted EBITDA, and Adjusted EPS, which are
considered non-GAAP financial measures. The non-GAAP financial measures
provided should be viewed in addition to, and not as an alternative for,
financial measures prepared in accordance with accounting principles
generally accepted in the United States of America ("GAAP") that are
presented in this press release. The non-GAAP financial measures
presented may differ from similarly titled non-GAAP financial measures
presented by other companies, and other companies may not define these
non-GAAP financial measures in the same way. These measures are not
substitutes for their comparable GAAP financial measures, such as net
sales, net income/(loss), diluted earnings per share, or other measures
prescribed by GAAP, and there are limitations to using non-GAAP
financial measures.

Management uses these non-GAAP financial measures to assist in comparing
the Company's performance on a consistent basis for purposes of business
decision making by removing the impact of certain items that management
believes do not directly reflect the Company's underlying operations.
Management believes that presenting the Company's non-GAAP financial
measures is useful to investors because it (i) provides investors with
meaningful supplemental information regarding financial performance by
excluding certain items, (ii) permits investors to view performance
using the same tools that management uses to budget, make operating and
strategic decisions, and evaluate historical performance, and (iii)
otherwise provides supplemental information that may be useful to
investors in evaluating the Company's results. The Company believes that
the presentation of these non-GAAP financial measures, when considered
together with the corresponding GAAP financial measures and the
reconciliations to those measures, provides investors with additional
understanding of the factors and trends affecting the Company's business
than could be obtained absent these disclosures.

Organic Net Sales is defined as net sales excluding, when they occur,
the impact of acquisitions, currency, divestitures and a 53rd week of
shipments. The Company calculates the impact of currency on net sales by
holding exchange rates constant at the previous year's exchange rate,
with the exception of Venezuela following the Company's June 28, 2015
currency devaluation, for which the Company calculates the previous
year's results using the current year's exchange rate. Organic Net Sales
is a tool that can assist management and investors in comparing the
Company's performance on a consistent basis by removing the impact of
certain items that management believes do not directly reflect the
Company's underlying operations.

Adjusted EBITDA is defined as net income/(loss) from continuing
operations before interest expense, other expense/(income), net,
provision for/(benefit from) income taxes; in addition to these
adjustments, the Company excludes, when they occur, the impacts of
depreciation and amortization (excluding integration and restructuring
expenses) (including amortization of postretirement benefit plans prior
service credits), integration and restructuring expenses, merger costs,
unrealized losses/(gains) on commodity hedges, impairment losses,
losses/(gains) on the sale of a business, nonmonetary currency
devaluation (e.g., remeasurement gains and losses), and equity award
compensation expense (excluding integration and restructuring expenses).
The Company also presents Adjusted EBITDA on a constant currency basis.
The Company calculates the impact of currency on Adjusted EBITDA by
holding exchange rates constant at the previous year's exchange rate,
with the exception of Venezuela following the Company's June 28, 2015
devaluation of the Venezuelan bolivar and remeasurement of assets and
liabilities of its Venezuelan subsidiary, for which it calculates the
previous year's results using the current year's exchange rate. Adjusted
EBITDA is a tool that can assist management and investors in comparing
the Company's performance on a consistent basis by removing the impact
of certain items that management believes do not directly reflect the
Company's underlying operations.

Adjusted EPS is defined as diluted earnings per share excluding, when
they occur, the impacts of integration and restructuring expenses,
merger costs, unrealized losses/(gains) on commodity hedges, impairment
losses, losses/(gains) on the sale of a business, and nonmonetary
currency devaluation (e.g., remeasurement gains and losses), and
including when they occur, adjustments to reflect preferred stock
dividend payments on an accrual basis. The Company believes Adjusted EPS
provides important comparability of underlying operating results,
allowing investors and management to assess operating performance on a
consistent basis.

See the attached schedules for supplemental financial data, which
includes the financial information, the non-GAAP financial measures and
corresponding reconciliations for the relevant periods.

Schedule 1

The Kraft Heinz Company

Condensed Consolidated Statements of Income

(in millions, except per share data)

(Unaudited)

For the Three Months Ended

April 1, 2017

April 3, 2016

Net sales

$

6,364

$

6,570

Cost of products sold(a)

4,063

4,192

Gross profit

2,301

2,378

Selling, general and administrative expenses(b)

750

865

Operating income

1,551

1,513

Interest expense

313

249

Other expense/(income), net

(12

)

(8

)

Income/(loss) before income taxes

1,250

1,272

Provision for/(benefit from) income taxes

359

372

Net income/(loss)

891

900

Net income/(loss) attributable to noncontrolling interest

(2

)

4

Net income/(loss) attributable to common shareholders

$

893

$

896

Basic shares outstanding

1,217

1,215

Diluted shares outstanding

1,229

1,225

Per share data applicable to common shareholders:

Basic earnings/(loss) per share

$

0.73

$

0.74

Diluted earnings/(loss) per share

0.73

0.73

(a)

Integration and restructuring expenses recorded in cost of products
sold were $103 million in the first quarter of 2017 ($71 million
after-tax) and $181 million in the first quarter of 2016 ($122
million after-tax).

(b)

Integration and restructuring expenses recorded in selling, general
and administrative expenses were $45 million in the first quarter of
2017 ($30 million after-tax) and $79 million in the first quarter of
2016 ($53 million after-tax).

Schedule 2

The Kraft Heinz Company

Reconciliation of Net Sales to Organic Net Sales

For the Three Months Ended

(dollars in millions)

(Unaudited)

Impact of

Organic Net

Net Sales

Currency

Sales

Price

Volume/Mix

April 1, 2017

United States

$

4,552

$

—

$

4,552

Canada

443

14

429

Europe

543

(39

)

582

Rest of World

826

10

816

$

6,364

$

(15

)

$

6,379

April 3, 2016

United States

$

4,715

$

—

$

4,715

Canada

504

—

504

Europe(a)

583

—

583

Rest of World(a)

768

13

755

$

6,570

$

13

$

6,557

Year-over-year growth rates

United States

(3.5

)%

0.0

pp

(3.5

)%

0.7

pp

(4.2

) pp

Canada

(12.2

)%

2.7

pp

(14.9

)%

(1.0

) pp

(13.9

) pp

Europe(a)

(6.8

)%

(6.6

) pp

(0.2

)%

(0.6

) pp

0.4

pp

Rest of World(a)

7.5

%

(0.6

) pp

8.1

%

5.1

pp

3.0

pp

Kraft Heinz

(3.1

)%

(0.4

) pp

(2.7

)%

1.0

pp

(3.7

) pp

(a)

In the fourth quarter of 2016, the Company moved the Russia business
from the Rest of World segment to the Europe segment. This change
resulted in reclassification of net sales from the Rest of World
segment to the Europe segment of $30 million for the first quarter
ended April 3, 2016.

In the fourth quarter of 2016, the Company moved the Russia business
from the Rest of World segment to the Europe segment. This change
resulted in the reclassification of Segment Adjusted EBITDA from the
Rest of World segment to the Europe segment of $1 million for the
first quarter ended April 3, 2016.

(b)

In the fourth quarter of 2016, management of our GPO moved from one
of our European subsidiaries to our global headquarters. This change
resulted in the reclassification of Segment Adjusted EBITDA from the
Europe segment to general corporate expenses of $2 million for the
first quarter ended April 3, 2016.

In the fourth quarter of 2016, the Company moved the Russia business
from the Rest of World segment to the Europe segment. This change
resulted in the reclassification of Segment Adjusted EBITDA from the
Rest of World segment to the Europe segment of $1 million for the
first quarter ended April 3, 2016.

(b)

In the fourth quarter of 2016, management of our GPO moved from one
of our European subsidiaries to our global headquarters. This change
resulted in the reclassification of Segment Adjusted EBITDA from the
Europe segment to general corporate expenses of $2 million for the
first quarter ended April 3, 2016.

Schedule 5

The Kraft Heinz Company

Reconciliation of Diluted EPS to Adjusted EPS

(Unaudited)

For the Three Months Ended

April 1, 2017

April 3, 2016

Diluted EPS

$

0.73

$

0.73

Integration and restructuring expenses(a)(b)

0.08

0.14

Merger costs(a)(b)

—

0.01

Unrealized losses/(gains) on commodity hedges(a)(b)

0.02

—

Nonmonetary currency devaluation(a)(c)

0.01

—

Preferred dividend adjustment(d)

—

(0.15

)

Adjusted EPS

$

0.84

$

0.73

(a)

Income tax expense associated with these items is based on
applicable jurisdictional tax rates and deductibility assessment of
individual items.

(b)

Refer to the reconciliation of net income/(loss) to Adjusted EBITDA
for the related gross expenses.

(c)

Nonmonetary currency devaluation includes the following gross
expenses/(income):

• Expenses recorded in cost of products sold of were $1 million
for the three months ended April 3, 2016 (there were no such
expenses for the three months ended April 1, 2017) and

• Expenses recorded in other expense/(income), net, were $8
million for the three months ended April 1, 2017 (there were no
such expenses for the three months ended April 3, 2016).

(d)

For Adjusted EPS, we present the impact of the Series A Preferred
Stock dividend payments on an accrual basis. Accordingly, we
included an adjustment to EPS to include $180 million of Series A
Preferred Stock dividends in the three months ended April 3, 2016
(to reflect the March 7, 2016 Series A Preferred Stock dividend that
was paid in December 2015).